Can assets have a credit balance?

-This question was submitted by a user and answered by a volunteer of our choice.

Yes, there are a few assets that show the credit balance. Those assets generally hold zero or unfavourable balances.

Assets that have a credit balance

From accounting perspective assets and expenses generally have a debit balance whereas liabilities, revenue and capital have a credit balance. Yet there exist a couple of assets that do have a credit balance those assets are known as contra assets.

Contra Asset

A contra asset is referred to as an asset that generally has a zero or negative balance. Such an asset is used to offset or reduce the balance of the respective asset account with which it is paired to. Hence reducing or offsetting the amount of the respective asset account with the contra asset account gives us the net value of the respective asset.

It acts as an asset holding credit balance. Contra assets are useful for the organization because it allows them to follow the matching principle by initially recording an expense in the contra asset account.


Assets with a negative balance


For Example – Max purchased an air conditioner from eBay for 4,00,000. The salvage value of the air- conditioner is 30,000 and has an expected useful life of 10 years. On 31-12-YYYY, how much balance will be shown in the Accumulated Depreciation account.



Annual Depreciation = (Value of Asset – Salvage value)/Estimated life of the asset.

= (4,00,000 – 30,000)/10  => 37,000

 Dr                                       Accumulated Depreciation a/c                                     Cr

Date Particulars Amount Date Particulars Amount
31-12-YYYY By Dep. a/c 37,000
31-12-YYYY By Dep. a/c 37,000
31-12-YYYY By Dep. a/c 37,000
31-12-YYYY By Dep. a/c 37,000
Total 1,48,000

Net Asset value = Total asset value – Accumulated Depreciation

= 4,00,000 – 1,48,000  => 2,52,000


Placement in the Balance Sheet

Assets with Negative Balance

Here in the balance sheet “Accumulated Depreciation” shows a negative balance which is a contra asset and it is deducted from the respective asset account. Hence providing us with the Net value of the asset.



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